The NVIDIA share price in 2024 may have much further to run!

Marc Kennis Marc Kennis, February 22, 2024

The NVIDIA share price in 2024 … what’s  in store?

NVIDIA reported stunning quarterly numbers on 22 February 2024 with revenues beating analysts forecasts by a wide margin. Additionally, the outlook for the current quarter was better than expected as well! The share price jumped by 10% in after hours trading on Wall Street almost reaching the stock’s all-time-high of US$746. The question arises … what is going to happen to the NVIDIA share price in 2024? Can it rally much further?

 

Another blow-out quarter

NVIDIA reported US$22.1BN in revenues for the fourth quarter (ended January 31) where the market was expecting “just” US$20.4bn. Net profit came in at US$12.3BN, compared to US$1.4BN a year earlier! How’s that for year-on-year growth?

On top of that, the company’s revenue outlook of US$24BN for the current quarter beat market expectations of US$22.2BN as well and there is probably much more to come. To illustrate this point, NVIDIA’s CEO said the company expects “our next-generation products to be supply constrained as demand far exceeds supply.” That bodes well for the NVIDIA share price in 2024.

 

NVIDIA is still not overvalued by our metrics

Following the last 4 quarters of NVIDIA beating expectations and lifting its outlook multiple times, the market by now has driven up NVIDIA’s valuation to around 34x EV/EBITDA for FY25 and 29x for FY26! For any “traditional” company that would seem outrageous. However, as readers of Stocks Down Under will know, we like to relate this valuation metric to expected EBITDA growth.

For FY25 and FY26, the market is forecasting EBITDA of US$75.1BN and US$87.2BN respectively, which would represent 43% and 16% respectively. In our book, that makes NVIDIA look cheap on FY25 numbers. And these numbers don’t yet include the earnings revisions that analysts will make following the quarterly report. So, chances are that the FY26 numbers will get revised upwards in the next few days so that the current 16% EBITDA growth forecast for FY26 will go up. That in turn will be very beneficial for the NVIDIA share price in 2024!

 

CHECK OUT OUR WEBINAR ON NVIDIA FROM LAST YEAR!

NVIDIA webinar

 

We think Artificial Intelligence is only just starting to take off

The future for Artificial Intelligence (AI) is bright with the sector just starting to take off and company’s pumping out newer and better chipsets all the time. And the application areas are expanding all the time. OpenAI’s very ambitious plan is to raise US$5-7 trillion (!!) in the next few years to make its AI dreams a reality.

In our view, the next technological step in AI will be neuromorphic processing where AI chips are behaving more like biological neurons rather than the chips being programmed to understand what they need to do. And we’ve got a few stocks that play in that field listed right here on our own ASX!

 

AI on the ASX

BrainChip (ASX:BRN), Weebit Nano (ASX:WBT) and 4DS Memory (ASX:4DS) all have an AI investment angle. BRN has developed Akida, a neuromorphic processor that is currently being evaluated by a number of (potential) customers. WBT and 4DS each have their own version of ReRAM, a resistive RAM technology that has application areas in embedded and stand-alone memory as well as neuromorphic processing.

So, as an investor you don’t have to look across the Pacific ocean to find AI plays, albeit that our local ones are more speculative than NVIDIA, which obviously is the well-established market leader that even trumps big players like ARM and AMD when it comes to revenues.

In conclusion, we believe the NVIDIA share price in 2024 has got a long way to run.

 

What are the Best ASX AI Stocks to invest in?

Check our buy/sell tips

 

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